In this article, we will take a look at the 11 best aluminum stocks to buy. To see more such companies, go directly to 5 Best Aluminum Stocks To Buy.
Aluminum is one of the most useful metals that have major applications in lucrative domains like aerospace, car manufacturing, computing and packaging. Estimates suggest that the global aluminum market was valued at about $1917.48 million in 2021 and was expected to grow at a CAGR of 2.1% until 2027 to reach $2171.8 million.
2022 was not a good year for the metal as reports suggested a record increase in aluminum stockpiles due to slowing demand and fears related to a global recession. A Bloomberg report said in September that London Metal Exchange aluminum inventories posted their biggest increase since February.
Similarly, a Bloomberg report in October said that companies that consume aluminum were holding off booking 2023 orders due to inflation, supply-chain issues and global recession fears.
But aluminum remains one of the most lucrative markets for long-term investors since analysts believe sooner or later the global recession will recede and the economy will come back to normal. Perhaps the best news for the aluminum industry came recently when China decided to lift its COVID restrictions. Aluminum prices immediately saw a jump. China is one of the biggest users of the metal. The country also produces aluminum. It produced 3.44 million mt of aluminum in December.
Some of the notable names in our list of best aluminum stocks to buy include Alcoa Corporation (NYSE:AA), Rio Tinto Group (NYSE:RIO) and Reliance Steel & Aluminum Co. (NYSE:RS).
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Our Methodology
In this article we scoured the aluminum industry and narrowed down our selection to 11 stocks that are poised to grow in the future based on solid fundamentals. Most of these stocks are the favorite aluminum picks of the 920 elite hedge funds tracked by Insider Monkey. However, you will also see some non-US stocks in list which give investors a solid opprtuinty to bet on the emerging markets. Some of these companies produce aluminum, while others make aluminum products.
Best Aluminum Stocks To Buy
11. Vedanta Ltd (NYSE:VEDL)
Number of Hedge Fund Holders: N/A
Vedanta Ltd (NYSE:VEDL) gives an opportunity to investors to bet on the aluminum sector of one of the biggest emerging markets in the world: India. Vedanta Ltd (NYSE:VEDL) is India’s largest aluminum producer. India has the biggest aluminum production capacity after China, and Vedanta Ltd (NYSE:VEDL) is in a position to benefit from this huge potential. Vedanta Ltd (NYSE:VEDL) on its website says that it produces more than half of India’s aluminum. It produced 1.9 million tonnes per annum (MTPA) of the metal in FY20. This means the company has more than 40% market share of aluminum in India.
Vedanta Ltd (NYSE:VEDL) operates smelters, alumina refinery and power plants across India. The stock is trading at 316 INR as of January 10. Vedanta’s shares have gained about 37% over the past six months.
10. Glencore plc (OTC:GLNCY)
Number of Hedge Fund Holders: N/A
Glencore plc (OTC:GLNCY) is a Switzerland-based company that is one of the world’s biggest miners. Glencore plc (OTC:GLNCY) also deals in the aluminum market. It processes and sells products from a range of third-party aluminum and alumina producers. These products include bauxite, primary aluminum, and aluminum alloys.
Glencore plc (OTC:GLNCY) recently gave a soft guidance amid rising costs and macroeconomic volatility. But what gives the company an edge over its competitors is its highly diversified portfolio. The company is expected to enjoy several tailwinds in the near future. These include growth in the coal market, the EV boom, and its effects on the nickel and copper markets, among others. The company’s strong position in the EV battery market gives it a sufficient buffer to offset losses from other segments. Glencore has won supply contracts with major car companies, including General Motors (GM) and Tesla (TSLA).
9. Aluminum Corporation of China Limited
Number of Hedge Fund Holders: N/A
An important Chinese player in the list, Aluminum Corporation of China is the world’s second-largest alumina producer and third-largest primary aluminum producer. Aluminum Corporation of China Limited is engaged in the extraction of aluminum oxide, the electrolysis of virgin aluminum, and the processing and production of aluminum.
However, the volatility in the Chinese market could post short-term risks for the stock. In the first nine months of last year, the company posted revenue of RMB 206 billion compared to RMB 195 billion posted in the same period the previous year.
Net profit in the period however fell a whopping 37.5% to come in at RMB 4.45 billion.
Overall, the company is a risky play in our list and presents an attractive opportunity for investors who are betting on the Chinese aluminum market.
8. Kaiser Aluminum Corp. (NASDAQ:KALU)
Number of Hedge Fund Holders: 9
Kaiser Aluminum Corp. (NASDAQ:KALU) is one of the most notable pure-play aluminum companies in the US. Kaiser Aluminum Corp. (NASDAQ:KALU) has the capacity to produce about 400,000,000 pounds (180,000 long tons) of aluminum annually. Kaiser Aluminum Corp. (NASDAQ:KALU) is also a high-yield dividend stock. Kaiser Aluminum Corp. (NASDAQ:KALU) has a dividend yield of about 3.6% as of January 10. In October, Kaiser Aluminum Corp. (NASDAQ:KALU) declared a dividend of $0.77/share. The forward dividend yield at the time came in at 4.58%. The dividend was payable on November 15 to shareholders of record on Oct. 25.
As of the end of the third quarter, 9 hedge funds tracked by Insider Monkey had stakes in Kaiser Aluminum Corp. (NASDAQ:KALU). The total value of these stakes was about $29 million. Among the notable of these stakeholders are Ken Fisher’s Fisher Asset Management, Jim Simons’ Renaissance Technologies, and Martin Whitman’s Third Avenue Management.
7. Century Aluminum Co. (NASDAQ:CENX)
Number of Hedge Fund Holders: 19
Illinois-based Century Aluminum Co. (NASDAQ:CENX) is the biggest producer of primary aluminum in the US. Over the past six months, the stock has gained about 35%. In the third quarter, Century Aluminum Co. (NASDAQ:CENX) managed to beat estimates for non-GAAP EPS. However, its revenue, despite rising by 10%, missed estimates by $4.87 million. Shipments in the quarter fell by 19%. Net income in the quarter came in at $44.3 million, which showed a $6.9 million increase sequentially.
Century Aluminum Co. (NASDAQ:CENX) is one of the best snall-cap aluminum stocks to buy now as the firm has a market cap of about $870 million and Century Aluminum Co. (NASDAQ:CENX) is trading at $9.60 as of January 10. As of the end of the third quarter of 2022, 19 hedge funds tracked by Insider Monkey reported having stakes in the company. The total value of these stakes at the end of September was $34 million.
6. BHP Group (NYSE:BHP)
Number of Hedge Fund Holders: 20
One of the biggest miners in the world, BHP Group (NYSE:BHP) operates its aluminum business under the BHP Billiton Aluminum arm. BHP Group (NYSE:BHP) produces aluminum, copper, energy coal, iron ore, manganese, metallurgical coal, nickel, silver, and uranium along with substantial interests in oil and gas. BHP Group (NYSE:BHP) is one of the high-yield dividend stocks, with a yield of 9% as of January 10.
As of the end of the third quarter, 20 hedge funds tracked by Insider Monkey reported having stakes in BHP Group (NYSE:BHP).
In the next part of this article we will take a look at some more important aluminum stocks, including Alcoa Corporation (NYSE:AA), Rio Tinto Group (NYSE:RIO) and Reliance Steel & Aluminum Co. (NYSE:RS).
Click to continue reading and see 5 Best Aluminum Stocks To Buy.
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Disclosure: None. 11 Best Aluminum Stocks To Buy is originally published on Insider Monkey.
